Which instruments should I be watching?

As a 'relative' newcomer to trading, I find myself wondering lately which instruments I should watch, along with what I'm trading.

Confused? I sure am!

What I mean is - say for example I'm trading YM - should I watch ES and NQ in the same timescale (for confirming signals, volume confirmation etc)? Do I need to watch the price of Oil, for example, or is it totally immaterial?

Or do I just have my one instrument that I'm trading open in a bunch of timescales ( say, 1m, 5m, 10m, 30m)

In other words, what are the real "must-do's" and "must have's"?? (assuming there are any)

I always watch the Dow Jones Financial index (DJUSFN)
It's a good way to measure how the market reacts to any sort of economic news. Use a 5 minute chart with 9/18 EMA's and SlowSto (14,3) and RSI (20)

I also watch the TRIN to measure sentiment.
5 minute chart with 10/33 EMA's. The direction of the 33 EMA TRIN is seldom wrong as a market sentiment indicator.

It's also a good idea to watch the 10 year bond yield reaction when economic news is released. The bond market reaction, usually has a strong effect on stocks.

Last Friday when the great jobs report came in, many bought on the good news. But the bond market seemed to think the news was inflationary and bond yields shot up quickly. When yields go up, stocks go down and the expected rise in stocks never happened.

I don't think it helps to watch the S&P, Dow, Nasdaq & Russell side by side. I did it for many months and never really found any advantage. However, it's my opinion from watching them that the Russell has the least whipsaw and false breakouts. That's why I trade the ER2 today.

As a 'relative' newcomer to trading, I find myself wondering lately which instruments I should watch, along with what I'm trading.

Confused? I sure am!

What I mean is - say for example I'm trading YM - should I watch ES and NQ in the same timescale (for confirming signals, volume confirmation etc)? Do I need to watch the price of Oil, for example, or is it totally immaterial?

Or do I just have my one instrument that I'm trading open in a bunch of timescales ( say, 1m, 5m, 10m, 30m)

In other words, what are the real "must-do's" and "must have's"?? (assuming there are any)

Frag

More...

Hi Frag,

You already know you should be aware of what Oil is doing on one particular trading day (based on a previous thread in which I discussed such with you).

(Hint: Review all your past Wednesday's charts between 1015am - 11am est except for the ones where the EIA report was postponed to another trading day.)

As to if you should watch ES, NQ or ER2 while you trade YM...

That's greatly dependent upon your specific strategy.

I mean...some strategies may be dependent upon watching them and others aren't.

Another way to determine if you should or not...

Test what ever it is that your hinting here in this thread.

If it improves your trading...then watching those other trading instruments or any other trading instrument is important.

If it doesn't improve your trading...then there's no value to you eventhough it may be of value to someone else.

Simply, we can't tell you if there's value there or not unless you either tell us what your strategy is or we tell you what our strategy is...

Until then...your just going to get comments like it helps or it doesn't help.

For me...it helps to watch ES, YM, NQ and ER2.

Mainly because I'm not married to any particular trading instrument and I can get a trade signal in one whereas there may not be a trade signal in the others at the same time.

Simply, I increase my odds of finding getting a trade signal by watching all four of them instead of just one.

You already know you should be aware of what Oil is doing on one particular trading day (based on a previous thread in which I discussed such with you).

(Hint: Review all your past Wednesday's charts between 1015am - 11am est except for the ones where the EIA report was postponed to another trading day.)

As to if you should watch ES, NQ or ER2 while you trade YM...

That's greatly dependent upon your specific strategy.

I mean...some strategies may be dependent upon watching them and others aren't.

Another way to determine if you should or not...

Test what ever it is that your hinting here in this thread.

If it improves your trading...then watching those other trading instruments or any other trading instrument is important.

If it doesn't improve your trading...then there's no value to you eventhough it may be of value to someone else.

Simply, we can't tell you if there's value there or not unless you either tell us what your strategy is or we tell you what our strategy is...

Until then...your just going to get comments like it helps or it doesn't help.

For me...it helps to watch ES, YM, NQ and ER2.

Mainly because I'm not married to any particular trading instrument and I can get a trade signal in one whereas there may not be a trade signal in the others at the same time.

Simply, I increase my odds of finding getting a trade signal by watching all four of them instead of just one.

I get about 5 trade signals per day via watching all 4 of them.

Frag, sounds like your still putting together a strategy ???

NihabaAshi

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OK yes, I appreciate your comments about oil/news etc. Its not that I wasn't listening or paying attention - just wanted to be sure I had it straight.

My strat at present regarding YM is to take signals and entries from a short-term (1m) chart (predominantly those based upon price and volume action - ie double bottoms/tops, horiz supp/res, asc/desc triangles etc) and then manage them on a slightly higher timescale (5m) to stay with the trend. I also like to use a 5m candle chart for spotting intraday hammers and the like. Alternatively, if its a choppy day - like Monday - I'll simply go for 10-12 points at a time, rather than trying to capture the bigger moves. I always bracket my orders using stops and limits for protection and profit taking, and I always buy/sell at market.

Anyhows, the questions about ES and NQ are because I've been told that volume in these two is more reliable than YM, which, whilst tradable, has pretty thin volume in comparison to ES and NQ. So, at a double top, for example (intraday or otherwise) I have sometimes found it useful to look at ES/NQ volume to confirm a reversal. But do I need to do this? Is the volume on YM accurate enough, for example, to do this without me resorting to checking the others? Sometimes I reckon that I confuse myself because I'll see one thing in YM as a potential pattern, and I won't see it quite the same in ES/NQ - so I begin to question my analysis, and wonder if I'm seeing something that isnt there ('cos Im a bit new at all this, I guess). After the event of course, it becomes quite clear that it was there and that I was a dumb sh1t to not trade what I saw (guess I'm answering my own questions as I go here, huh? )

However, I don't want to trade ES right now because whilst I appreciate its the most liquid instrument around probably, the size of the contract is too much for me right now - I know I wouldn't be able to trade it effectively because of that.